Technically, it generates cash but not revenue. It should be booked as a liability at the time of purchase, because they owe you some future service when you later redeem the miles. The liability is reversed when you fly or redeem for some other product or service. The also have to accrue liability when you earn miles on paid tickets. It's all estimates and a fair amount of hocus pocus because who knows whether you will redeem for cheap tickets or premium tickets in X years, but they just pick a recognized method and use it consistently. The key point is that all these partner miles and purchased miles bring in cash float, which airlines always so desperately need.

The reason I point this out is that having huge future liabilities like unearned revenue on your books is not considered a good thing. That's one of the reasons that everyone moved to expire the miles...they can actually remove the liability when they expire as they no longer owe you any service. Removing the liability DOES result in either revenue or an offset to your costs, depending on how they choose to model it. That helps the bottom line even though no cash comes in when the miles expire.

Oh yeah, all those peripheral fees flow almost 100% to the bottom line as many are not refunded or are only refunded if a flight cancels, and the fees are usually collected just before the service is performed. That's a reason they are so in favor.

Welcome to the joys of accrual accounting.